Car parks snapped up as spaces dwindle
Melbourne's residential and workplace population is booming but car parking spaces are not matching the growth.
Over the past 13 years only 9551 car spaces have been added to the CBD's supply of 38,085 commercial places while the number of on-street parks has shrunk by 501.
In 2003 there was 3230 metered spaces on Melbourne's streets, now there is 2729.
Conversely over eight years to 2010, the city's working population increased by 27 per cent, to about 223,000 at last count.
The number of residents has also risen sharply, by 36 per cent over five years to 2010.
"We get 800,000 people in the city on an ordinary day," Melbourne's lord mayor, Robert Doyle, said.
Parking is at a premium. City of Melbourne data shows a total of 72,000 commercial, private, residential and on-street spaces across the CBD. "We don't have a policy to keep cars out or bring them in. What we try to do is manage the city so all users get a fair go and that includes motorists," Mr Doyle said. "You're never going to meet the demands of a busy city."
Clearly most of the city's daily commuters, shoppers and tourists arrive by transport other than car but the tight supply of vehicle parking has put the spotlight on commercial car parks as a prized, but specialised, property asset.
Yields are tightening and investors are quick to snap up buildings offered to the market, said Savills Australia's Clinton Baxter.
Two weeks ago Mr Baxter and colleague Nick Peden sold a car park at 517 Flinders Lane for $6 million on a low yield of 6.4 per cent. A year earlier, another in Russell Street went for $16.8 million on yield of 7.4 per cent and in 2011, 300 Flinders Street sold on a yield of 7.9 per cent.
"Previously a rarely traded and little understood sector of the CBD market, car parking assets are now firmly in the sights of investors for their attributes of strong cash flow, low maintenance, zero vacancy and strong capital growth potential," Mr Baxter said.
Competition for city car parking in all its forms is likely to get sharper.
On-street parking across the city is set to diminish further as tram super-stops, loading zones, disabled access and bike lanes expand. As well, undeveloped land in the CBD, traditionally used as open-air car lots, is rapidly giving way to residential dwellings.
High-rise towers are rising from previously vacant sites in Franklin, Mackenzie and Collins streets.
The free-standing Scots Church car park (260 spaces) was demolished last year to make way for Westpac's headquarters, a 20,000-square-metre office building housing 1000 workers.
And a major city car park currently for sale opposite Melbourne Central is expected to make way for a residential tower.